Also: Omicron severity, Tesla and Dogecoin, and Ukraine.
Happy Friday.
I spent an hour yesterday interviewing hedge-fund-billionaire-turned-historian Ray Dalio for the Economic Club of New York and came away with a clearer view of the Armageddon he sees lurking before us. Dalio takes 500 pages to tell his story in his book, and I only have 300 words, so forgive me in advance for oversimplifying.
As I wrote when the book published in November, Dalio’s study of cycles has led him to pinpoint three problem areas at the current moment in history: the financial order, distorted by massive debt creation; the internal U.S. political order, wrecked by distrust and polarization; and the external order, threatened by the rise of China and the decline of the U.S. Each of these has parallels in the past and follows similar patterns that make it possible to project their future.
What I didn’t fully appreciate after reading the book was how he sees those three cycles interacting with each other. The nightmare scenario, as I interpret it, comes when persistent inflation leads the Fed to hike interest rates and precipitate a downturn—an event that he suggested is likely to hit at the end of 2023 or the beginning of 2024. That would be just in time to fuel populism as the U.S. heads into a presidential election, creating a fraught situation in which neither side is willing to accept a loss. The result would be a constitutional crisis hobbling the U.S. and creating a moment of opportunity for China to move on Taiwan, or Russia to move on Ukraine, or maybe both. Boom.
Given this week’s events—the worst measured inflation in 40 years, increased congressional infighting over the Jan. 6 commission, and failed talks with Russia over Ukraine—that scenario doesn’t sound so outlandish.
Asked by one participant what could be done to reduce the risk, Dalio was quick to answer: heal the political divide. Reject both political extremes and restore a spirit of compromise. Good luck with that. By the way, Dalio told me earlier that the only presidential candidate he’s ever supported was John McCain—and only then because of McCain’s bipartisan history. Maybe Joe Manchin should be calling for support.
More news below. And while we are talking about China, read Grady McGregor and Eamon Barrett’s smart piece about how China’s increasingly challenged COVID-zero policies could add to supply chain chaos.
Alan Murray
@alansmurray
alan.murray@fortune.com
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Omicron severity
Data from South Africa, where Omicron was first spotted, suggests the latest COVID variant causes less severe illness in the unvaccinated—even those who never had a COVID infection—as well as the vaccinated. The study is yet to be peer-reviewed. Fortune
Tesla and Dogecoin
Dogecoin's value surged more than 12% today after (you guessed it) Elon Musk tweeted that the dog-themed cryptocurrency can be used to buy Tesla merchandise. Not its cars, though. Fortune
Meta antitrust (again)
A class action has been lodged against Meta/Facebook in the U.K., alleging a breach of competition law. The suit is seeking compensation for the company's 44 million British users, for exploitation of their personal data, on the basis that they received nothing more than "free" access to the Facebook platform in return for giving up that data. TechCrunch
Ukraine cyberattack
Somebody attacked and brought down several Ukrainian government websites today. The attack closely followed Russia's warning of "catastrophic consequences" from its failed talks with the U.S. over the future of Ukraine. But remember, folks, attributing hacks and cyberattacks is always a risky business. Bloomberg
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NK crypto
North Korean hackers (health warning: see above) stole nearly $400 million in cryptocurrency from investment firms and exchanges last year, according to blockchain analysis firm Chainalysis. BBC
Djokovic visa (again)
Who knew a humble visa could prove to be such a running story? Serbian tennis star Novak "Novax" Djokovic has for the second time had his cancelled by the Australian authorities, again threatening his ability to compete in the Australian Open. His lawyers are challenging the decision, etc, etc. Guardian
Finance influencer
Bain Capital Ventures has apparently hired whoever is behind the finance meme account Litquidity, who has 192,700 people following him on Twitter and 633,000 on Instagram. "Lit" isn't just an influencer, of course; he says he previously worked in investment banking and private equity. Fortune
Mask reuse
How many times can you reuse an N95/KN95 mask? Officials recommendations aside, here's Fortune's Chris Morris: "The CDC recommends using an N95 or KN95 mask no more than five times in general, though it does acknowledge that some models can be worn even more." Read on for how best to air the things. Fortune
This edition of CEO Daily was edited by David Meyer.
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